Background
VirgoCX is a crypto asset trading platform that is focused on providing security and compliance for Canadians. Since its inception in 2018, the company has continued its endeavour to promote the safe custody and storage of cryptocurrencies for its customers. VirgoCX engaged Huayan CPA Professional Corporation to perform a “Proof of Reserve” (PoR) audit as of EST 14:35 on Nov 24th, 2020, to demonstrate that VirgoCX controlled amounts of cryptocurrencies greater or equal than outstanding customer liabilities. The report looked at all aspects of our business including Ledger Vault, security practices and asset-liability ratio to ensure VirgoCX was operating as transparently and compliantly as possible.
Report Summaries
All customer cryptocurrency (ETH, BTC, USDT, PAX, USDC, EURS, LTC, BCH, EOS and PAXG) held with Ledger Vault was verified through account balances and via the multi-signature wallet interface that VirgoCX utilizes (for their hot wallets). This was further independently verified through a combination of access tests, a balance change test, and sample transaction data found on the Bitcoin and Ethereum blockchains. This procedure provided full Proof of Reserves of VirgoCX’s cryptocurrency customer assets.
Based on the setup procedures and security protocols necessary to access cryptocurrency customer assets, cryptocurrency holdings held in hot wallets are unlikely to be compromised, while cryptocurrency holdings held in Ledger Vault’s institutional cryptocurrency storage solution are extremely unlikely to be compromised in any way.
All fiat (fiat: CAD, USD ) customer balances were verified via a combination of records found in back-end systems, in conjunction with a historical record of past transactions and past data, and show that as of the date of this report, all customer balances as per VirgoCX’s records match customer CAD and USD assets held in segregated bank accounts.
Report Findings
At the time of the assessment, Huayan CPA observed and tested balances on the back-end system. Huayan CPA also observed VirgoCX’s holdings(crypto: ETH, BTC, USDT, PAX, USDC, EURS, LTC, BCH, EOS and PAXG; fiat: CAD, USD) were in excess of 100% of liabilities and was able to exercise the use of the private keys to demonstrate ownership and control at the time of the assessment. It is found that VirgoCX has currency reserves as mentioned above in excess of customer liabilities; the reason for the excess is to fund future costs of transactions. Huayan CPA observed a collateralization ratio of between 100% to 107%.
As of the publishing of this article, all employees at VirgoCX have been through criminal background checks, including the founders and leadership team. There is no evidence to suggest any employee would elect to compromise VirgoCX operations, nonetheless, tiered access and approval measures have been implemented effectively to both prevent or mitigate a breach of VirgoCX’s systems, customer data, and customer assets.
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